Individuals interested in paying for home improvements, paying off their high-interest debt, or even funding other expenses can take advantage of a home equity line of credit. That is if you have the right amount of equity in your home. 

To help you get the ball rolling, applying for a HELOC may be in order. After all, this allows you to borrow money against the current value of your home. 


If you’re wondering how to gain HELOC eligibility, know that these vary from one lender to another. There are various factors that determine your ability to qualify and secure one. To get the best chance for getting this type of loan, take a look at the following below.

HELOC Eligibility – Learn What it Takes to Qualify

What is a HELOC?

A home equity line of credit, otherwise known as HELOC, is a second mortgage against your home. Typically paid out in a lump sum, this revolving line of credit can be used to pay larger expenses, including debts or loans. 

Because this uses your home as collateral, you get lower interest rates. What’s more, you can easily start repayments right away. 


HELOC Eligibility Requirements to Remember

The HELOC eligibility requirements may vary from one lender to another. However, these generally maintain that borrowers or applicants to have home equity, high credit score, a stable income, debt, and reliable payment history. Read on to know more. 

Home Equity

Having high or even sufficient equity is key to getting a HELOC. This particular aspect gauges how much one person can borrow. Individuals interested in getting this type of credit should, at the very least, have 15% to 20% of home equity

To qualify for home equity, the mortgage or the amount you currently owe on your home must be less than the total value of your home. Get an appraisal to determine how much your home’s current market value. 

Strong Credit Score

Your credit score should be somewhere around the mid-600s to be considered by most lenders. After all, the definition of a good and strong credit score varies depending on the lender. Some say the ideal score for home equity loans is 680

Those with higher scores starting from 740 and up may get better deals. Not only do they have more leverage, but they can also obtain better rates. 

The higher this score is, the more reliable you’ll be in lenders’ eyes. This is because your credit score is calculated based on your payment history, the amount you owe, the type of credit under your name, and the like. 

Debt-to-Income Ratio

Another important aspect usually taken into consideration by lenders is your debt-to-income ratio. This is one way to gauge your ability to borrow and pay against your existing loans and obligations. 

The ideal debt-to-income ratio is 43% or lower. More lenders prefer to have borrowers who have a smaller amount of debt relative to their income as this indicates low-risk clients. 

To calculate this, make sure to add all your monthly debt payments and other expenses, including child support, loans, and the like. Then, divide the number by your monthly income. Convert the result and this is your debt-to-income ratio. 


Last but not least is creditworthiness. Applicants with a strong reliable payment history are more likely to be approved for a HELOC. You can get this by paying your bills on time. Individuals who have a history of paying late are more likely to be considered high risk by lenders.

HELOC Eligibility – Learn What it Takes to Qualify


If you are still interested in taking out a home equity line of credit, make sure to take note of these qualifications. These guidelines can help you attain the lump sum you need to make improvements in various aspects of your life.